CALGARY, ALBERTA--(Marketwire - Oct. 12, 2012) -
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
WesternZagros Resources Ltd. (TSX VENTURE:WZR) ("WesternZagros" or "the Company") has completed its testing program in the deepest of the three stacked reservoirs drilled by the Kurdamir-2 exploration well in the Kurdistan Region of Iraq. The testing confirmed an oil discovery in low permeability fractured limestones of the Cretaceous-age, Shiranish Formation, adding to the previously announced major oil discovery in the Oligocene reservoir. The Shiranish reservoir exhibited non-commercial flow rates in this location.
The combined audited unrisked mean estimate for all three reservoirs on the Kurdamir prospect is 1,609 million barrels ("MMbbl") of prospective oil resources as at May 31, 2012, 11 percent of which (181 MMbbls), is attributed to the Cretaceous. The Company now expects this number for the Cretaceous to be revised downward, although it is not expected to materially change the estimate of prospective resources of the whole Kurdamir prospect.
Commenting on the Shiranish test results, WesternZagros's Chief Executive Officer Simon Hatfield said:
"While we had hoped that the Shiranish reservoir might duplicate the tremendous results we saw in the Oligocene, we also knew that the characteristics of the Shiranish vary a great deal by location. Although we didn't achieve a commercial flow rate due to the tight nature of the Shiranish reservoir at Kurdamir -2, we did confirm it contains light oil. These test results add to the growing evidence that Kurdamir and the neighbouring Tophkana structure are in fact a giant shared structure with common oil accumulations. We look forward to the remainder of the Kurdamir-2 testing program, focusing on the shallower Eocene reservoir and our main target of the Oligocene reservoir."
As previously reported in March 2012, the first drill stem test on the Kurdamir-2 well resulted in a major oil discovery in the Oligocene interval. The well was then drilled to a total depth of 4,000 metres in June 2012. In addition to the oil-bearing intervals encountered in the Oligocene and Eocene reservoirs, hydrocarbon shows and wireline logs indicated the presence of a gross hydrocarbon-bearing interval of approximately 500 metres of fractured limestones and marls in the Shiranish Formation, which was the focus of the recent testing program.
The Shiranish testing program consisted of three cased hole tests over a 221 metres gross interval and resulted in the flow of light, 39 to 40 degree API oil at sub-commercial rates. Further evaluation, including additional analyses of the test results, followed by the already planned extensive 3D seismic program, will be required to better understand if the Shiranish is likely to have commercial reservoir characteristics.
The Company is encouraged that the Shiranish testing program recovered oil from a depth that is significantly deeper than the limit of closure of the Kurdamir structure at the Cretaceous level as mapped from seismic data. This finding supports the observation that the Shiranish reservoir, in a similar fashion as the Oligocene reservoir, is also involved in a considerably larger trap and that Kurdamir and the neighbouring Tophkana structure share a common oil accumulation in the Shiranish reservoir.
The testing operations in the Shiranish interval were concluded on October 9, 2012, following a number of delays due to downhole tool problems. Preparations are currently underway to conduct a cased hole testing program on the interpreted 275 metres of gross oil pay in the Eocene before moving further uphole to conduct additional testing on the main zone of interest in this well, the 118 metres of gross oil pay already discovered in the Oligocene. The operator, Talisman (Block K44) B.V. and WesternZagros are also planning a 3D seismic program over the Kurdamir and Topkhana structures and a further appraisal well (Kurdamir-3) to assess the ultimate size of the Kurdamir discovery. WesternZagros and Talisman each have a 40 percent working interest in the Kurdamir Block, with the Kurdistan Regional Government holding the remaining 20 percent.
About WesternZagros Resources Ltd.
WesternZagros is an international natural resources company engaged in acquiring properties and exploring for, developing and producing crude oil and natural gas in Iraq. WesternZagros, through its wholly-owned subsidiaries, holds a 40 percent working interest in two Production Sharing Contracts with the Kurdistan Regional Government in the Kurdistan Region of Iraq. WesternZagros's shares trade in Canada on the TSX Venture Exchange under the symbol "WZR".
This news release contains certain forward‐looking information relating, but not limited, to operational information, future drilling and testing plans, and the timing associated therewith. Forward-looking information typically contains statements with words such as "anticipate", "plan", "estimate", "expect", "potential", "could", or similar words suggesting future outcomes. The Company cautions readers not to place undue reliance on forward‐looking information as by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by WesternZagros. In addition, the forward‐looking information is made as of the date hereof, and the Company assumes no obligation to update or revise such to reflect new events or circumstances, except as required by law.
Forward‐looking information is not based on historical facts but rather on management's current expectations and assumptions regarding, among other things, plans for and results of drilling activity and testing programs, future capital and other expenditures (including the amount, nature and sources of funding thereof), continued political stability, and timely receipt of any necessary government or regulatory approvals. Although the Company believes the expectations and assumptions reflected in such forward‐looking information are reasonable, they may prove to be incorrect. Forward‐looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those anticipated by WesternZagros including, but not limited to, risks associated with the oil and gas industry (e.g. operational risks in exploration; inherent uncertainties in interpreting geological data; changes in plans with respect to exploration or capital expenditures; interruptions in operations together with any associated insurance proceedings; the uncertainty of estimates and projections in relation to costs and expenses and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with negotiating with foreign governments and risk associated with international activity. For further information on WesternZagros and the risks associated with its business, please see the Company's Annual Information Form dated March 26, 2012 (the "AIF"), which is available on SEDAR at www.sedar.com.
In addition, statements relating to prospective oil resources contained herein are deemed to be forward -looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources described can be economically produced in the future. Terms related to resource classifications referred to herein are based on the definitions and guidelines in the Canadian Oil and Gas Evaluation Handbook which are as follows. "Prospective resources" are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery (geological chance of success) and a chance of development (economic, regulatory, market, facility, corporate commitment or political risks). The chance of commerciality is the product of these two risk components. The estimates referred to herein have not been risked for either the chance of discovery or the chance of development. There is no certainty that any portion of the prospective resources will be discovered. If a discovery is made, there is no certainty that it will be developed or, if it is developed, there is no certainty as to the timing of such development or that it will be commercially viable to produce any portion of the prospective resources. The combined prospective resource estimate referenced was independently audited as of May 31, 2012 (Tertiary Eocene), April 20, 2012 (Tertiary Oligocene) and January 14, 2011 (Cretaceous) and is the gross volume for the indicated reservoirs, without any adjustment for the Company's working interest or encumbrances. The Company's Statement of Oil and Gas Information contained in its Annual Information Form dated March 26, 2012 ("AIF") and Material Change Reports dated April 23, 2012 and June 6, 2012 ("Material Change Reports") filed on SEDAR at www.sedar.com contain additional detail with respect to the resource assessments and include the significant risks and uncertainties associated with the estimates and the recovery and development of the resources. In addition, the combined mean estimate of prospective resources referenced is an arithmetic sum of the mean estimates for the three individual reservoirs on the Kurdamir structure and each such individual mean estimate is the average from the probabilistic assessment that was completed for the reservoir. Readers should refer to the AIF and the Material Change Reports for a detailed breakdown of the high (P10), low (P90) and best (P50) estimates for each of the individual reservoir assessments.
WESTERNZAGROS RESOURCES WAS RECOGNIZED AS A TSX VENTURE 50® COMPANY IN 2012. TSX VENTURE 50 IS A TRADE-MARK OF TSX INC. AND IS USED UNDER LICENSE.
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